A devastating report into one of the world's worst clerical sex abuse scandals has found that children throughout County Wexford were abused over a 40-year period while the Catholic church, the police and the Irish state failed in their duty to protect them.

At least 21 priests were accused of more than 100 cases of rape and sexual assault against children in the diocese of Ferns from 1962 to 2002. The rural area of south-east Ireland is believed to have the highest proportion of accused clergy in a Catholic diocese anywhere in the world.

The report, headed by the retired supreme court judge Frank Murphy, is Ireland's first state investigation into the Catholic church's handling of abuse allegations against priests. It found that the church's negligence in dealing with allegations went as far as the Vatican.

Colm O'Gorman, a victim of child rape by one priest in Wexford, told Irish state broadcaster RTE: "The report says very clearly that the Vatican carries a responsibility for the rape and abuse of children."

The report is likely to spark public anger in Ireland, where the once all-powerful Catholic church has been hugely damaged by revelations of abuse.

The most notorious serial rapist named in the report is Father Sean Fortune, a violent bully who blackmailed his victims into silence. He came to his first parish, Fethard-on-Sea, in the late 1970s with a background of child sex abuse allegations while at the St Peter's College seminary in Wexford town. He was allowed to set up local youth groups and invite boys for overnight stays at his house. In the report, 25 complaints were made against him. Concerned parishioners had organised a delegation to two bishops and written to the Papal Nuncio, the Pope's ambassador in Ireland, but nothing happened.

When complaints were made against Fortune in 1987, the church sent him to London to do a communications course and seek therapy. On his return, he was made director of media outlet the National Association of Community Broadcasting, where he was later accused of raping a 15-year-old boy in a studio booth.

In 1999, in the first week of a trial on 29 charges of sexual abuse against eight boys, Fortune, 45, barricaded himself into his small home in County Wexford, protected by steel security shutters and CCTV, and committed suicide.

Yesterday's report found that for 20 years, Bishop Donal Herlihy, who was in charge of the Ferns diocese, treated sexual abuse of a child as a moral problem and did not recognise it as a serious criminal offence. When complaints were made, he would penalise the priest by transferring him to a different job for a period before returning him to his old position. He also ordained "clearly unsuitable men into the priesthood" when he knew or ought to have known thay might abuse children.

A second senior clergyman, Bishop Brendan Comiskey, was said to have consistently failed to have priests step aside because he considered it unjust as allegations of abuse were not substantiated. He resigned in April 2002.

Irish police were blamed for not keeping records of informal complaints of abuse, including an allegation that 10 girls were sexually assaulted by a priest at the altar in the parish church of Monageer.

The current Bishop of Ferns, Eamonn Walsh, apologised unreservedly for the horrific abuse people in the diocese had suffered. The taoiseach, Bertie Ahern, said immediate action would be taken on the "shocking" report.